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Threat and Opportunity Horizons

10/05/2021 … Author:

In less than eighteen months the world went from identifying a new virus, to implementing a global immunisation programme. There are of course many things that could have been done better and many lives that could have been saved, but the overall achievement has been phenomenal and led many to ask what else can we do? Whilst the possibilities are endless, and many pioneers are driving forward, the next worldwide effort is again, likely to be in response to a threat.

Beyond pandemics, threats to humanity, or at least modern civilization, are numerate. Environmental threats are aplenty; whilst there has been a long focus on air pollution and the destruction of rainforests, more airtime of late has been afforded to the impact of plastic pollution and the choking of the oceans. Plastic micro particles have been found in every living creature, even at the deepest part of the ocean, in rain samples from across the globe and even in the snow falling in the Arctic. I fear this situation will get a lot worse before it gets better, and the long-term implications are unknown.

For another significant threat we need to look up. Being on a rock hurtling through space comes with its own external risks, not least from other rocks but our technological advances are creating their own dangers. In the sixty years we have been sending things into space, we’ve done a pretty poor job of keeping our orbit clean. NASA estimates that there are over 520,000 pieces of debris at least the size of a bullet hurtling around the Earth at speeds of up to 17,500 mph. With 1,000 new satellites being launched each year, Earth’s orbit is becoming an increasingly busy and dangerous place. Not only does each piece of space junk have the potential to do immense damage to, or even destroy an operational satellite, or spacecraft, the chain reaction risk known as Kessler Syndrome, as highlighted in the 2013 movie Gravity, is an ever-present threat. In the extreme, such an outcome a few years from now could spell disaster for civilization as we know it, crippling internet technologies, bringing global transport to a standstill and sending us back decades, overnight.

Thankfully, with threats also come opportunities. Avoiding the serious threats to our planet is starting to attract investment and could become very big business, very soon, as we start to make initial inroads into cleaning up our own backyard – inner and outer atmosphere.

Hopefully, we have seen the last of pandemics in our lifetimes and will not witness anything worse. As immunisation programmes take effect, so the world is beginning to recover. We can expect that healthcare, environmental and related industries will see raised profiles over the next few years.

What else can we do? Innovative thinking is achieving new milestones. After 50-odd missions to Mars over the years, a large proportion of which were lost for one reason or another, we have now witnessed humanity deploy the first aircraft on our nearest neighbouring planet and many of us will live to witness the first manned missions there, potentially within the decade. Science fiction is becoming science fact.

Part of our role as Independent Financial Advisers is to spot the opportunities these situations present for our clients. That said, out-with the Lowes Changing World Portfolio, which has a heavy technology bias, our investment philosophy is not exceptionally adventurous, seeking instead to achieve reasonable returns without exposing the capital to undue risk.

This is for one simple reason – history tells us that nothing runs smoothly all the time, there can be unexpected events, unintended consequences and everything we do – including dealing with a pandemic, space exploration and investing in the stockmarkets – requires careful risk assessment and long-term thinking and horizons.

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